POSTED: 8:45 a.m., 2/23
With Room Key’s consumer-marketing push at least a month away and a marketing budget nowhere near the likes of some third-party intermediaries, Room Key executives are touting “exit traffic” as their main demand driver now and moving forward.
Exit traffic, CEO John Davis described, delivers to the traveler a pop-up window as they’re leaving a brand.com website that directs them to RoomKey.com for additional hotel options. For example, if a consumer has entered a destination and travel dates on HolidayInn.com but does not book a room and instead heads to another site or closes the window, the consumer might see a window offering comparison shopping for those same dates in that same location on Roomkey.com.
Hoteliers from the participating brands offered 10% of their exit traffic to Room Key, sources said, and Davis said that was initially putting Room Key in front of approximately 10 million travelers. As more brands partner with Room Key, those numbers consequentially rise.
Earlier this month, Room Key executives declined to share more details on the pop-up window. However, HotelNewsNow.com was able to obtain screenshots of the “exit traffic” strategy, confirming it is in place and illustrating how RoomKey.com is attracting visitors.
The above screenshot was captured upon leaving HolidayInn.com and heading to Travelocity.com. Clicking the link to continue searching, the user was directed to RoomKey.com, where the traveler’s destination and date were already determined (see below). Following the URL is a “partner code” so each party can track how much traffic is sent from brand.com to Roomkey.com.
Once the user arrived at Roomkey.com, there were 27 hotels listed on the main screen.
POSTED: 10:30 a.m., 2/1
REPORT FROM THE U.S.—After the initial jubilation over an online distribution channel with commissions around 10% wore off, hoteliers are now beginning to ask tough questions about how Roomkey.com will be marketed to compete with existing third-party sites.
Because, after all, commissions, connections and content mean little if a booking channel can’t drive traffic.
“We know about Room Key because we are in the industry and people are paying us to know about it. But the average consumer—how do they even learn about Room Key?” said Max Starkov, president and CEO at Hospitality eBusiness Strategies.
“Are they going to do a Super Bowl ad?” asked Michelle Davis, director of revenue management for HVMG, an Atlanta-based hotel ownership and third-party management group that owns and/or operates 30 hotels.
Twenty-two of HVMG’s 30 hotels operate under Hilton Worldwide or Marriott International franchise agreements. Hilton and Marriott are two of the six franchisors who came together in a joint-venture to launch Room Key, a metasearch that will offer travelers the ability to search, shop and compare hotel rooms from the different participating brands and then send them to brand.com to book. Previously, the ability to compare different brands was only available via third-party metasearch sites such as Kayak or Google’s Hotel Finder, and Room Key’s direct connection to the franchisor adds a layer of speed and reliability to receiving rate and inventory.
Asked about a Super Bowl ad, Room Key’s CEO John Davis chuckled, saying a commercial during the Super Bowl would cost half of Room Key’s first-year marketing budget. He said the company will move forward with a consumer awareness push, but not until March at the earliest.
“We’re still going through the strategy—what’s the best bang for the buck,” he said.
Davis reiterated that Room Key will get most of its eyeballs and marketing clout from “exit traffic” from the major participating brands. While that process still is ramping up, Davis was able to offer some details on how it will work.
He said, of the travelers who search on brand.com sites, only about 5% end up booking. The remaining 95% leave brand.com to go somewhere else to shop, and end up viewing about four or five other sites. Therefore, Room Key’s model is built around offering “one last shot to convince the consumer” by sending a portion of the travelers from brand.com to Roomkey.com.
In short, Room Key has built a “pop under,” or a layer underneath the brand.com site that collects the travelers’ date range and location while he or she enters it on brand.com. Then, while the consumer browses, Room Key searches and delivers a handful of alternative properties that fit those criteria. If the traveler does not book and instead decides to leave brand.com or exit out of the browser, he or she will be prompted to visit Room Key for alternative options.
“We’re going to get the chance to provide this screen to well over 10 million people,” Davis said. “That’s pretty good advertising at a very low cost. We’re hopefully looking at 20 million people by the end of (February).”
Still, some hotel marketing experts say Room Key is not yet taking advantage of the value propositions it offers to customers. Specifically, HeBS’ Starkov said Room Key is unique in that it naturally has last-room availability from the hotel companies and can provide loyalty-program participation.
“These are two comparatively strong value propositions that Room Key has, but do you see them anywhere on the Room Key site? No, it’s not there,” he said.
Starkov said last-room availability is “very precious” to the hotel industry—something Choice Hotels International went head-to-head against Expedia for control of—and is a big advantage Room Key is not properly promoting on its marketing materials or website.
“What we have seen in the past when travel demand picks up is that we are living in world of rate parity and it’s not the rate that matters, it’s the availability,” he said. “Look at Indianapolis now (site of Super Bowl XLVI), look at New York City before the recession. We know for a fact that OTAs have contracted at much lower commissions—15% to 16%—just to have the inventory.”
Brand participation moving forward
Aside from the initial investments and subsequently driving about 10% of travelers who leave their respective sites to Roomkey.com, at least one hotel franchisor said there are no plans to continue funding Room Key’s marketing budget.
Steve Sickel, senior VP of distribution and relationship marketing for InterContinental Hotels Group, said IHG will not raise royalty fees to accommodate hotels’ placement on Roomkey.com and that IHG does not have any money in its 2012 advertising budget to promote Room Key.
Davis said he will “try and avoid” having to return to his JV partners to ask for more funding. He considers them shareholders, he said, “no different than being a shareholder of Exxon (Mobil).”
Franchisors raising royalty fees to accommodate placement on Roomkey.com would have caused a “pretty major uproar” from franchisees, said Stephen Field, president of Synergy Hospitality, who said he sees the need for Room Key but admitted he was a bit skeptical about its business model.
Field raised concerns over franchisors collecting royalty fees for marketing their hotels and simultaneously profiting from commissions charged to hotels for rooms sold on Room Key, a practice he said could be considered “double-dipping.”
Sickel said IHG will process the commissions on the hotel sales but that the funds will go straight to Room Key, and Davis said fees collected will be reinvested into the site.
“That’s not double-dipping at all; it’s not the franchisor charging (the hotels) a commission, it’s Room Key charging them a commission,” he said.
Starkov said the investment from franchisors puts Room Key and its investors in a “tricky situation” and could be a major disadvantage for Room Key because “it cannot expect any support from the brands for continuing promotion.”
“Not only in the form of funds but in the form of free publicity. None of the brands are going to do that,” Starkov said. “Apart from the initial venture capital, Room Key is on its own.
“And as we’ve seen in the past, when you’re on your own things get tough.”